I'm wondering what folks here think of this article. From ZEROHEDGE: "Since the beginning of July, the most prominent feature of the market has been the divergence in volume between financials and "all other" stocks. While overall stock market volume has been flat if not down over the past two months, and a continuation of a long-term downward trend since the March ramp up, the volume in financial stocks has staged an unprecedented pick up." Citibank, Cit, AIG, Fannie, Freddie... http://www.zerohedge.com/article/five-financial-stocks-dominating-market-volume - How is that the 5 stocks with the best rallies and most volume are pretty much the worst financial stocks you could own at this point?
People bet that the bailouts will work out. If they do, you want to ride the fins that come from the deepest holes, 'cause those have the most to gain. There's another very stupid reason. Lots of people (including professionals) think that if they buy a $5 share then all they risk is $5, since shares can't go deeper than $0, and they look at where the price was just 6 months ago. And then they tie up X% of their portfolio to that stock...
Your reason might explain a little of it. Most of the volume imo is from the machines in these stocks. Remember higher volume begets higher volume, the boxes pick this up and gravitate to a smaller and smaller universe of stocks. The professionals I know trade the five stocks mentioned along with fas,faz almost exclusively. I know one trader who traded 4 million shares of C in a day. This is of course nothing volume when you consider the stock now trades a billion shares a day. The float just keeps moving and moving everyday with very few smart money people buying and holding any of these junk stocks very long.
Volume (and bots) doesn't explain a 50% continuous rise in price. And there is a major divergence in volume and price.
Yes you are very correct, most of these bots/programs have now utterly disappeared from the small/mid cap space except for a very brief interval in feburary. We have Obama to thank for this.